Pre-Budget Report 2009 - Business "disappointed" on UK tax competitiveness


  • Patent regime welcome too little too late
  • Dangerous when corporates have shown they are prepared to vote with their feet
  • Business likely to foot the bill for National Insurance, income tax and VAT rises

 

Wednesday, 9 December 2009

Commenting on today's pre-budget report and its impact on large corporates, Sue Bonney, head of tax at KPMG Europe, said
"From a large corporates' perspective, the best that can be said of today's pre-budget report is 'it could have been a lot worse'. And many will be disappointed to see so little that will really improve the UK's business environment.

"This is dangerous for the UK economy: businesses have shown they are willing to vote with their feet. A very recent KPMG survey showed that over half of large corporates had considered or were considering migrating from the UK. And four of the 20 FTSE 100 companies surveyed said they were actively considering leaving.

"While at first sight today's PBR may well leave large corporates breathing a sigh of relief. But on closer examination, it is clear that business is going to be left picking up a substantial tab.

"In a speech full of references to growth and innovation, the only targeted measure towards this seems to be the new tax regime for profits arising from patents. Whilst undoubtedly to be welcomed, this is a long way off as it won't come in until 2013 and only on patents registered after then. This seems very far away when the fact is that businesses can go elsewhere now and get that relief straight away.

"Furthermore, measures such as the rise in national insurance contributions, the freezing of the higher rate of income tax (which on the face of it are levied on individuals) will in fact most likely be absorbed by corporates either in terms of increased employment costs as it means it will cost more to put a pound in an employee's pocket. Similarly some businesses may be wary of putting up the prices charged to customers and therefore will end up funding the VAT increase.

"Coupled with these immediate costs, we saw the usual raft of additional layers of legislation targeting specific tax planning which, whilst understandable, inevitably add to the growing complexity burden business faces on tax.”

Ends

Pre-budget report media hotline: 0207 694 8773
For further information please contact:
Margot Cowhig
Tel: +44 7920 274 856
Email: margot.cowhig@kpmg.co.uk

www.kpmg.eu/pbr2009

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About KPMG: KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with 11,500 partners and staff. The UK firm recorded a turnover of €2.2 billion in the year ended September 2008. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 148 countries and have more than 113,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. KPMG International provides no client services.